We study how enhancers activate transcription in the chromatin environment of eukaryotic cells. To study the interaction of globin genes and elements of the beta-globin locus control region (LCR), we have used chromatinized, stably replicating episomes in human erythroid K562 cells. Double label FISH confirms the maintenance of 10-15 episomes per cell. The episomes, as expected, associate with the cellular chromosomes, providing a means to achieve equivalent segregation at cell division. Mutagenesis studies which systematically eliminated transcription factor binding sites in LCR HS2 and in the embryonic epsilon-globin promoter in minichromosomes, revealed that enhancer and promoter mutually affect each others chromatin structure. Studies with the beta-globin gene, and with LCR HS3 and HS4 provide additional support for this concept. These data are most consistent with a direct communication model of enhancer action. To further understand enhancer dependent promoter remodeling, we examined promoter remodeling and histone acetylation at transcriptionally active and inactive promoters. ChIPs assays revealed dramatic hyperacetylation of histone H3 and H4 specifically at the promoter proximal nucleosome in active promoters, while the adjacent upstream nucleosome was not differentially acetylated. Both promoter remodeling and histone hyperacetylation were dependent on the HS2 enhancer, and, interestingly, on the TATA box in the promoter. We continue to explore the order of events underlying gene activation by a distant enhancer and the regulatory role in vivo of chromatin structure in the expression of globin genes.